House prices dip in June
The small fall, combined with very strong growth this time last year, led to a further decline in the annual rate of inflation to 3.3% – its lowest level for two years.
However the underlying three-month on three-month rate picked up to 1%, the strongest gain since the start of 2015. A rise in prices of just 0.2% in July would be enough to reverse the downwards trend in the annual rate of growth.
Matthew Pointon, property economist at Capital Economics, said: “The small dip in prices in June reported by the Nationwide is not a sign of a cooling market.
“On an underlying basis prices are still rising, and with active housing demand finally recovering annual house price gains have bottomed out.
“While we wouldn’t want to read too much into the volatile monthly data, the soft reading this month provides further evidence that the general election had a very limited impact on the overall market.
“In particular, there is no sign that uncertainty around the outcome depressed prices in the run-up, so it is not surprising that there has been no post-election bounce.”
On a regional basis London outperformed every region bar Northern Ireland, with a rise in prices of 2.3% during the second quarter.
Pointon added: “Given the very high level of valuations in the capital, and the fact that new limits on high loan-to-income ratios will bite harder there, we had expected it to underperform.
“That said, the annual rate of growth in London has slowed significantly, from 12.7% in Q1 to 7.3% in Q2, and we still expect annual gains by the end of the year to be below the UK average.
“For the country as a whole, the conditions are in place for a period of firmer house price gains. Active housing demand has finally started to pick-up, as record low mortgage rates tempt more people into the market.
“Indeed, households are the most confident in making a major purchase since the start of 2006, which is usually associated with accelerating price gains.
“We therefore expect annual gains to pick-up, with prices at the end of 2015 6% higher than at the start.”